Marie Johnston is a manager at an electronics store, and she has to decide how many workers to hire. If she hires one worker, her revenue is $400 per day. If she hires another worker, she can make another $350 per day. The marginal benefit of hiring another worker decreases by $50 with each additional hire. Assuming that workers are paid $20 per hour and work eight hours, how many employees should Marie hire, and what will be the total revenue of her store?
A)She will hire four workers and the revenue of the store will be $1,300.
B)She will hire five workers and the revenue of the store will be $1,500.
C)She will hire six workers and the revenue of the store will be $1,650.
D)She will hire seven workers and the revenue of the store will be $1,750.

Question

Quizplus · Accepted Answer

Marie should hire workers until the marginal benefit equals the marginal cost. The cost per worker is $160 per day ($20/hour * 8 hours). The marginal benefit decreases by $50 with each hire: $400, $350, $300, $250, $200, $150, $100. She should hire five workers, as the marginal benefit ($200) equals the marginal cost ($160) at the fifth worker. Total revenue will be $1,500 ($400 + $350 + $300 + $250 + $200).

Marie Johnston Is a Manager at an Electronics Store, and She